Commentary
20 funds from last month's 29 Best of the Best (BOTB) Selection regained their position in March's shortlist. This is one of the largest number of retained funds for quite some time and is a reflection of how momentum has been driving the market. February was a good month for the BOTB with some huge wins. For example the Cavendish Technology fund made 6.7% over the month as did the Blackrock US Dynamic fund! In fact every fund in the BOTB made money in February with the only exception being Artemis Strategic Assets which fell 0.1%.
Once again those who took investment risks were rewarded, particularly if that exposure was via technology stocks, US equities or Smaller Companies. While the BOTB's European equity funds performed well (Marlborough European Multi-Cap was up 1.5%) they generally lagged other regions (as shown in this month's Heatmap). For example the FTSE 100 was up 3%. I was pleased with the BOTB average return, assuming all the funds were held in equal weight, of 2.65%. Especially given that the portfolio only had around a 70% exposure to equities. So a strong February built upon a strong January when the BOTB significantly outperformed the market.
A number of the funds that have dropped out of the BOTB only just missed being included and remain in the BFBS tables. So it's a case of steady as she goes for 80-20 Investors. However, there are some notable changes in the underlying asset mix this month. For starters the European equity exposure has dropped while the US exposure has increased significantly from last month and is now the largest component of the BOTB asset mix (see bottom of the post for a full breakdown). This is perhaps a reflection of the bullish sentiment surrounding the US equity market and the caution ahead of the French Presidential election and a possible Marine Le Pen victory. In terms of direct equity exposure the portfolio is still around 70%, on a par with last month .
It's also interesting to see that all the US equity funds are now medium risk (they were previously high risk) while the Marlborough European Multi-Cap has moved up into the high risk group. If you consider that US equities have not fallen by more than 1% in any given day for the last 90 days (that's the longest streak in a decade) perhaps the change in risk category by the algorithm was to be expected. .
At the foot of this article you can see how the 80-20 Investor Portfolio has continued to outperform the professional fund managers as well as the market since its launch over two and a half years ago. This month's update of the BOTB includes the same Asian fund from last month after a stellar performance (it was up 4.86%). Perhaps unsurprisingly a number of other Asian and emerging market funds only just missed out on being included in the BOTB this month. If you look at these sectors in the Best Funds by Sector (BFBS) tables you will see the strong returns over the last month.
The new BOTB's bond holdings are once again exclusively UK high yield bond funds that tend to have a lower duration, which has remained favourable in this environment. In addition the mixed asset funds have cemented themselves further in the low risk end of the BOTB list.
One final thing to note is that the Schroder Monthly High Income fund (which was in last month's BOTB list) has changed its name to the Schroder High Yield Opportunities fund (which is in this month's BOTB).
Below I list this month's selection in full with the 20 funds that regained their place in black while the new additions are in green. As usual, I have included the full list sorted alphabetically by name and then by risk category.
March's Best of the Best Selection - (A-Z by fund name)
(funds unchanged from last month are in black while new additions are in green)
| Name | Sector | ISIN Code | Risk Level |
| 7IM - AAP Income | Mixed Investment 0%-35% Shares | GB0033954024 | Low risk |
| 7IM - Unconstrained | Targeted Absolute Return | GB00B75MS619 | Low risk |
| Artemis - Global Income | Global Equity Income | GB00B5N99561 | Medium risk |
| Artemis - Monthly Distribution | Mixed Investment 20%-60% Shares | GB00B6TK3R06 | Low risk |
| AXA - Framlington Global Technology | Technology & Telecom | GB00B4W52V57 | High risk |
| AXA - Global High Income | Sterling High Yield | GB00B0T9V375 | Low risk |
| BlackRock - US Dynamic | North America | GB00B87XJQ69 | Medium risk |
| Cavendish - AIM | UK Smaller Companies | GB00B0JX3X39 | High risk |
| Cavendish - Technology | Technology & Telecom | GB00B60SMN24 | High risk |
| CF - Morant Wright Japan | Japan | GB0033010017 | High risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| FP - Apollo Multi Asset Cautious | Mixed Investment 20%-60% Shares | GB00B3FPDY55 | Low risk |
| Henderson - Global Technology | Technology & Telecom | GB0007698847 | High risk |
| Investec - Cautious Managed | Mixed Investment 20%-60% Shares | GB00B8NZ3M08 | Low risk |
| M&G - Global Dividend | Global | GB00B46J9127 | Medium risk |
| M&G - Recovery | UK All Companies | GB00B7759Y38 | Medium risk |
| Man GLG - Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | High risk |
| Marlborough - Far East Growth | Asia Pacific Excluding Japan | GB00B0NVCN62 | High risk |
| Neptune - Global Alpha | Flexible Investment | GB0031190555 | Medium risk |
| Old Mutual - Cirilium Moderate | Mixed Investment 40%-85% Shares | GB00B2Q8TP98 | Low risk |
| Premier - Diversified | Mixed Investment 40%-85% Shares | GB00B8BJV423 | Low risk |
| R&M - UK Equity Long Term Recovery | UK All Companies | GB00B614J053 | Medium risk |
| Royal London - US Growth Trust | North America | GB0030038359 | Medium risk |
| Schroder - High Yield Opportunities | Sterling High Yield | GB00B83RDY83 | Low risk |
| Schroder - Tokyo | Japan | GB00B4SZR818 | High risk |
| Schroder - UK Dynamic Smaller Companies | UK Smaller Companies | GB0007220360 | High risk |
| TB Saracen - Global Income & Growth | Global Equity Income | GB00B8MG4091 | Medium risk |
| UBS - US Equity | North America | GB00B7V68L26 | Medium risk |
| Wise Investments - TB Wise Investment | Flexible Investment | GB0034272533 | Medium risk |
March's Best of the Best Selection - (grouped by risk)
Here is March's shortlist grouped by their risk category (funds unchanged from last month are in black while new additions are in green):
| Name | Sector | ISIN Code | Risk Level |
| 7IM - AAP Income | Mixed Investment 0%-35% Shares | GB0033954024 | Low risk |
| 7IM - Unconstrained | Targeted Absolute Return | GB00B75MS619 | Low risk |
| Artemis - Monthly Distribution | Mixed Investment 20%-60% Shares | GB00B6TK3R06 | Low risk |
| AXA - Global High Income | Sterling High Yield | GB00B0T9V375 | Low risk |
| Fidelity - Global High Yield | Sterling High Yield | GB00B7K7SQ18 | Low risk |
| FP - Apollo Multi Asset Cautious | Mixed Investment 20%-60% Shares | GB00B3FPDY55 | Low risk |
| Investec - Cautious Managed | Mixed Investment 20%-60% Shares | GB00B8NZ3M08 | Low risk |
| Old Mutual - Cirilium Moderate | Mixed Investment 40%-85% Shares | GB00B2Q8TP98 | Low risk |
| Premier - Diversified | Mixed Investment 40%-85% Shares | GB00B8BJV423 | Low risk |
| Schroder - High Yield Opportunities | Sterling High Yield | GB00B83RDY83 | Low risk |
| Artemis - Global Income | Global Equity Income | GB00B5N99561 | Medium risk |
| BlackRock - US Dynamic | North America | GB00B87XJQ69 | Medium risk |
| M&G - Global Dividend | Global | GB00B46J9127 | Medium risk |
| M&G - Recovery | UK All Companies | GB00B7759Y38 | Medium risk |
| Neptune - Global Alpha | Flexible Investment | GB0031190555 | Medium risk |
| R&M - UK Equity Long Term Recovery | UK All Companies | GB00B614J053 | Medium risk |
| Royal London - US Growth Trust | North America | GB0030038359 | Medium risk |
| TB Saracen - Global Income & Growth | Global Equity Income | GB00B8MG4091 | Medium risk |
| UBS - US Equity | North America | GB00B7V68L26 | Medium risk |
| Wise Investments - TB Wise Investment | Flexible Investment | GB0034272533 | Medium risk |
| AXA - Framlington Global Technology | Technology & Telecom | GB00B4W52V57 | High risk |
| Cavendish - AIM | UK Smaller Companies | GB00B0JX3X39 | High risk |
| Cavendish - Technology | Technology & Telecom | GB00B60SMN24 | High risk |
| CF - Morant Wright Japan | Japan | GB0033010017 | High risk |
| Henderson - Global Technology | Technology & Telecom | GB0007698847 | High risk |
| Man GLG - Japan Core Alpha | Japan | GB00B3F46Y30 | High risk |
| Marlborough - European Multi-Cap | Europe Excluding UK | GB0001719730 | High risk |
| Marlborough - Far East Growth | Asia Pacific Excluding Japan | GB00B0NVCN62 | High risk |
| Schroder - Tokyo | Japan | GB00B4SZR818 | High risk |
| Schroder - UK Dynamic Smaller Companies | UK Smaller Companies | GB0007220360 | High risk |
The funds that dropped out of the Best of the Best Selection
For reference the funds from last month that dropped out of the 80-20 Investor Best of the Best list are listed below. Many of them remain in the Best funds by Sector selection:
| Name | Sector | ISIN Code | Risk Level |
| Artemis - Strategic Assets | Flexible Investment | GB00B3VDD431 | Medium risk |
| Baillie Gifford - Japanese | Japan | GB0006011133 | High risk |
| Cavendish - Opportunities | UK All Companies | GB0032212283 | High risk |
| IFSL - Brooks Macdonald Defensive Capital | Targeted Absolute Return | GB00B61MR835 | Low risk |
| JOHCM - UK Equity Income | UK Equity Income | GB00B03KR500 | Medium risk |
| Jupiter - UK Smaller Companies | UK Smaller Companies | GB0004911870 | High risk |
| R&M - UK Equity High Alpha | UK All Companies | GB00B3D79W34 | Medium risk |
| Schroder - European Alpha Plus | Europe Excluding UK | GB00B7LDKR32 | Medium risk |
| Schroder - Global Equity Income | Global | GB00B76V7M69 | Medium risk |
The Asset mix
The current asset mix of the new Best of the Best Selection is shown below with last month's figures in brackets:
- Global Fixed Interest 12% (12%)
- Alternatives 11% (10%) - mostly absolute return strategies
- UK Corporate Fixed Interest (i.e UK bonds) 2% (2%)
- North American Equities 22% (12%)
- European Equities 7% (9%)
- Japanese Equities 11% (11%)
- Property 0% (0%)
- UK Equities 18% (24%)
- Cash 4% (8%)
- Asian equities 0% (0%)
- Asia Pacific Emerging equities 0% (0%)
- Other international equities 13% (12%) which includes Asian equities
80-20 Investor's outperformance continues
As you know the Best of the Best Selection is the shortlist of the best funds highlighted by our 80-20 Investor algorithm split into high, medium and low risk categories. This shortlist is updated at the start of every month.
The green line in the chart below (click to enlarge) shows how a portfolio would have performed since inception (in August 2014) if it had been split equally between the Best of the Best Selection funds and then switched each month when each new shortlist was published. I have also charted the performance against that of the FTSE 100 (the black line) and the average cautious managed fund (blue line) and the average managed fund with up to 85% equity exposure (red line). In reality the 80-20 Investor's asset allocation typically lies between these two as it usually has 60-85% exposure to equities at any one time. So they provide a good comparison of how fund managers with a similar remit have fared over the same period.
As you can see, since launch in August 2014 the 80-20 Investor portfolio has HUGELY outperformed the average managed fund and the market. The large spike in performance in the 80-20 Investor portfolio on the right hand side of the chart is where the portfolio rallied after the Brexit referendum while global markets plummeted.
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